Risk of Non-Recovery

As a practical matter, the size of the loan affects the level of environmental due diligence in a transaction.  Banks commonly use a particular loan amount as a trigger requiring higher levels of environmental risk assessment.  For example, Bank policy may provide that loan amounts greater than $500,000 must be accompanied by a Phase I Environmental Site Assessment (ESA), whereas loan amounts less than $500,000 require lender transaction screening to determine if a Phase I ESA is necessary.